Financial Basics: Where Do We Start?

Advice from a financial advisor about getting your financial plan started.  Includes budget tools.This week I have a great guest article on an introduction to finances.  This article is from an anonymous contributor who is a Financial Advisor with great wisdom for couples to find a starting place in their financial plan.

I’m pleased to share this article about finances, why it’s important, and where to start.

Intro to Finances - Budgeting

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They say that over 50% of marriages end in divorce and of those, 75% of them have money as a root of the cause.  They also say that 95% of statistics are made up on the spot.  :)  Either way, being a good steward of what God has blessed you with is critical for anyone, married or single.

Why Is It So Hard?

On some levels, in my opinion, people try and overcomplicate the idea of financial planning.  There are typically three main reasons people don’t take the time to manage their finances on a more intentional level.  These reasons are:

  1. They feel like they don’t have enough money to manage.
  2. They have too much debt and feel like it is impossible to even get started.
  3. They feel like they are not educated enough to take on such a task.

While all of these may be legitimate concerns, none of them should paralyze someone into taking no action at all.  Over the years, I have been blessed to have the opportunity to meet with many families to help educate them on how to achieve success with their personal finances.  During that time, one consistent variable I have noticed is a lack of clarity around the financial plan; the vision, the goals and the path to get there . . .how can you know how to get somewhere, if you don’t know what the goal looks like?

Too Much Information

In the world of finance, medicine, business and just about anything else, it seems that new articles are published daily that contradict each other.  How can anyone make sense of anything?  Most of us want to do our ‘due-diligence’ to make sure we are taking the right steps…we read all of these articles, with each one bringing up some good, valid points….but if the author does not know you and your personal, specific situation, how can they be exact in helping you create a plan that is right for you and your family?  We read and research for weeks and at the end we achieve ‘paralysis by analysis’ and find ourselves right back where we started.  When it comes to financial planning, there is not a one size fits all model.  It is critical that you have someone you trust helping you navigate these sometimes challenging topics.

Budgeting 101

The key to starting is a good grasp around two simple things:
–   Income you have coming in on a monthly basis
–   Money going out on a monthly basis

Then from there, it is important to have a good game plan with what to do with any discretionary dollars each month.  The budget can be a daunting task and sometimes a deal breaker, but as we learn in the book of Luke, it is critical to count the cost to make sure we can finish (Luke 14:28).  The budget will take time, it is a process. . .but when you gain this clarity around your monthly spending, it will erase ambiguity around your finances that may have created tension or anxiety and open you up to dream about what may be possible as a steward of God’s resources.

In its simplest form, the budget is a list of expenses (fixed and variable). . .that get subtracted from the regular monthly income.

Just Keep Going

You can complete this in an excel spreadsheet, on a yellow pad or anything else that works for you.  A good tip on some monthly fluctuating expenses (restaurants, groceries, etc.), is to look back on the last three months of spending and get a good, accurate rolling average and commit to a number from that average.  The first few months will be a learning process, but don’t lose hope.  Proverbs 27:23, teaches us how important it is to manage our flocks…so take heart in the fact that you are taking steps to be a more committed and intentional steward for the Kingdom.

I hope to contribute more articles in the future on the subject of financial planning…everything from managing debt to insurance, investments and anything else that may be helpful.  For now, I will leave you to your budget and to the knowledge that I am praying for every person and family that visits Jo’s blog, with the hope of looking more like Jesus each and every day.

Intro to Finances - Budgeting

As Ben and I have worked on our budget, we revisit and revise it often.  Recognize it is a process, just like this article says.  Even though it takes work, it’s a secure feeling to know where our money is going and crunch the numbers to save where necessary.

There are two online tools we use for our budget.  Like I mention in this article, these are simply the methods that work for us:

  1. Dave Ramsey’s Gazelle Budget Lite – We used this starting our budget.  Each category (utilities, transportation, food, etc.) has ideal percentages to allot to each category.  You can play with the numbers to make all the expenses total your income, then print your finished budget.
  2. Mint.com – This makes tracking our ongoing budget simple!  Link your bank accounts and cards, then it organizes everything.  So each time we buy groceries, it already puts the purchase in the food category.  It also tracks spending trends, savings goals, and bill due dates.  You can watch their video below to see all the features.

If you need specific advice about your finances and goals, I’d love to recommend you to our advisor who has helped us get a good budget and plan in place.  Email jo {at} realmarriedlife.com if you have more questions.

So what about you?  What part of budgeting is the most difficult?  What system works for you?

Trackbacks

  1. […] some great budgeting tools to help you fine-tune a monthly budget, read my article on Financial Basics.  Not ready to buy a house yet, but looking to prepare?  Read my series on credit scores to get […]

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